CSE records the highest ever market capitalization

At a glance

* Total turnover for the week Rs. 5.9 bn

* Average daily turnover Rs. 1.2 bn

* JKH continued to lead the market

Stocks rallied for the fourth consecutive week amidst continued strong buying interest on index heavyweights, fuelling further sharp gains in indices.

The week saw the bourse’s market capitalization hitting an all time of Rs.942.7 billion on Thursday, surpassing the previous high of Rs. 938.6 billion registered on February 13, 2007. Comparing Week on Week (WoW) the ASPI (All Share Price Index) rose by 99.1 points or 3.5 percent to close at a 30 month high of 2939.4 points, while the MPI (Milanka Price Index) gained 122.9 points or 3.9 percent WoW to close at 3293.5 points, the highest in 17 months.

Blue chip counter JKH continued to lead the market activity with 10.8 million shares changing hands during the week. The counter contributed Rs.1.6 billion towards weekly turnover, while the share price showed a notable of 6.0 percent increase to close at Rs.155.00 per share. JKH topped daily turnover on four out the five trading days.

Continuing to remain among the top contributors Commercial Bank (COMB) posted a turnover of Rs.235.1 million while trading 1.4 million shares during the week. COMB observed a 7.7 percent price increase over the week to close at Rs.177.75 per share on Friday.

Ceylon Investment PLC (CINV), attracted high investor interest this week following its last week’s announcement of a share buyback. The company made an announcement to the CSE on September 8, that it would repurchase 20 percent of the shares of the company in issue from shareholders at a price of Rs. 189.00 on a pro-rata basis (1:5).

This week the counter emerged as the third highest contributor towards market turnover and injected Rs.184.6 million before closing at Rs. 170.00 per share on Friday.

Total turnover for the week amounted to Rs.5.9 billion with average daily turnover standing at Rs.1.2 billion. Foreign participation improved during the week to 27.1 percent of total activity. Total foreign purchases totalled Rs. 1.8 billion for the week while foreign sales stood at Rs. 1.4 billion leading to a net foreign inflow of Rs.387 million.

Volume wise highest traded stocks this week were Nawaloka, JKH, Dialog, Pan Asia, Vallibel and Nations Trust.

IPOs oversubscribed

Meanwhile, the two IPOs, which opened for subscription this week, were oversubscribed within the first day of issue. NAMAL Acuity Value Fund, which is the first Closed-end Unit Trust to be listed on the CSE, opened for subscription on Wednesday had reportedly collected Rs.536.8 million from 588 applicants by Thursday.

Meanwhile, the IPO of Hemas Group subsidiary, Hemas Power too was oversubscribed on Thursday having received subscriptions to the tune of Rs. 1.68 billion from 5000 applicants.

Point of View

Market aiming a historic high

Investor enthusiasm continued in the market this week with indices recording sizable gains on strong activity. As we expected, bargain hunters aggressively exploited a short lived profit taking session on Tuesday and pushed the ASPI further towards the 3000 mark. Overall, the ASPI gained 3.5 precent while MPI jumped 3.9 percent over the week.

Positive sentiment to prevail despite a possible technical correction

We envisage a possible technical correction as the investors slow down to re-evaluate higher stock prices after a rally that pushed up the ASI by 16.5 percent over the past four weeks.

However, the strong sentiment will continue in the market and any extensive profit taking efforts we believe would be duly outplayed by bargain hunters.

While, the market is poised to move steadily towards the 3000 mark in the medium term, a sustainable growth trend beyond that level would require more proactive participation of foreign investors in the market.

Foreign activity showed signs of improvement this week, recording a net inflow of Rs.387 million and we advise the investors to closely monitor foreign activity over the coming weeks as further improvements could give added support to market sentiment.

Nonetheless, with the market approaching the month-end we see the possibility of a technical correction, hence we advise the investors to keep an open eye on bargain hunting opportunities.

The information contained herein has been compiled from sources that Acuity Stockbrokers (Private) Limited (ASB) believes to be true and reliable but we do not hold ourselves responsible for its completeness or accuracy. No matter published herein create any liability of any kind on ASB. All opinions, views, findings and conclusions included in this report constitute ASB’s judgment of this date and are subject to change without notice.

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